The outbreak of COVID-19 has affected thousands of workers across Ireland.
Many have lost their employment or seen their role reduced while thousands are now working from the safety of their own homes.
In this guide, we are going to take a look at the financial reliefs that are in place to support workers during the pandemic and answer some of the most common questions that we have been receiving from our customers.
I have lost my job due to the COVID-19 pandemic. What supports are available to me?
The government has introduced a new social welfare payment – the 'COVID-19 Pandemic Unemployment Payment' – of €350 per week (initially the payment was worth €203) for employees and self-employed people who have lost their employment due to the coronavirus outbreak. The unemployment benefit will be paid up to 12 weeks through the Department of Employment Affairs and Social Protection (DEASP) rather than Revenue.
You can apply for this payment if you:
- were an employee or self-employed immediately before Friday 13 March 2020
- are aged between 18 and 66
- have lost your job or be temporarily laid off from work
- live in the Republic in Ireland
Students, EU citizens, non-EEA nationals and part-time workers can also apply for the payment.
If you have already applied for the payment before the 24 March, you do not need to do anything to receive the increased payment. Your next payment will include the increased rate.
Do I have to pay tax on the COVID-19 Pandemic Unemployment Payment?
In general, payments from the DEASP are taxable sources of income unless they are exempt from tax.
Taxable DEASP payments are subject to income tax, but not USC or PRSI.
Revenue is yet to confirm whether or not the Pandemic Unemployment Payment is taxable. However, it is likely that you will have to pay income tax on this payment.
It's important to note that, if the Pandemic Unemployment Payment is confirmed to be taxable, the tax will not be deducted at source. You will instead be liable for tax upon review at the end of the year. Where possible, Revenue will adjust your tax credits and cut off points via your employer's payroll. This will not be applicable to self-employed individuals.
If you usually pay tax at the higher rate, the subsidy will be subject to 40% income tax.
I have been diagnosed with COVID-19 and have been out of work as a result, are there any supports available to me?
If you have been diagnosed with COVID-19 or have been told to self-isolate by your GP, you should apply for Illness Benefit.
The government has introduced the following changes to the Illness Benefit scheme due to the pandemic:
Rate increased to €350 – the personal rate of Illness Benefit has been increased from €203 to €305 per week for up to two weeks where the individual has been instructed to self-isolate, but it will be paid for up to ten weeks if they have been diagnosed with COVID-19.
You can apply for the payment right away – you do not have to wait the standard 6 days before you can apply for the payment.
Supplementary Welfare Allowance – this payment will be available for both employees and the self-employed who are not eligible for Illness Benefit but are required to self-isolate or are diagnosed with Covid-19. Supplementary Welfare Allowance is exempt from tax.
However, it should be noted that the social insurance requirements for Illness Benefit will be waived, or the means test for Supplementary Welfare Allowance will be removed, if you are medically required to self-isolate or diagnosed with COVID-19.
Is Illness Benefit taxable?
Yes. DEASP Illness Benefit is subject to income tax. You will not have to pay USC or PRSI on this payment.
Revenue will take account of the amount of Illness or Injury Benefit paid when they adjust your tax credits or cut of point.
Income tax rate could be up to 40% if you pay tax at the higher rate.
What is the COVID-19 Temporary Wage Subsidy Scheme?
The COVID-19 Temporary Wage Subsidy Scheme was introduced on 26 March and will run for 12 weeks.
The purpose of the scheme is to keep employees registered with their employers and to enable employers to continue to pay wages during the pandemic.
If your employer has implemented the scheme, you will not need to apply for social welfare payments as you will continue to receive a wage from your employer.
Initially and until 4 May 2020, the subsidy will refund employers €410 (where the average net weekly pay is less than or equal to €586) or €350 (where the average net weekly pay is greater than €586 and less than or equal to €960) for each qualifying employee.
From 4 May 2020, the subsidy payment will move to a system based on the previous net weekly pay for each employee.
The scheme is also available to employees where their pre-Covid salary was greater than €76,000 and their post-Covid salary has fallen below €76,000. In cases where the employee's salary has now been reduced by:
- Less than 20% - no subsidy is payable
- Between 20% and 39% - a subsidy of up to €205 is payable
- 40% or more - a subsidy of up to €350 is payable
The scheme applies both to employers who make additional payments to their employees and those who are not in position to do so.
Since the changes announced from 4 May 2020 scheme will refund employers of up to 85% in case of employees whose previous average net weekly pay does not exceed €412.
In short, employees with a previous average net pay of up to €412 per week (roughly €24,400) will receive a subsidy of 85% of their previous net weekly pay.
A payment of up to €350 will apply where the employee's net weekly pay is between €412 - €500.
A 70% subsidy will be payable in the case of employees whose previous average net weekly pay is more than €500 but not more than €586, with maximum cap of €410.
The government is encouraging employers to top-up their employees' wages to maintain them at their current level of earnings.
In order to qualify, an employer must:
- declare to Revenue that they have experienced a minimum of 25% decline in turnover (between 14 March 2020 and 30 June 2020) due to the pandemic
- be unable to pay normal wages and normal outgoings fully
- keep their employees on the payroll
- only claim for employees that have been on your payroll on 29 February 2020 and have made payroll submission on their behalf to Revenue in the period from 1 February 2020 to 15 March 2020.
The average Irish tax refund is €1,880
Do employees have to pay tax on their COVID-19 Wage Subsidy Scheme payments?
While the scheme is not taxed through the PAYE system, some workers will have a tax liability while others will not. Income tax and USC will be charged on review at the end of the year. Employee PRSI will not apply on the subsidy.
Any tax liability will depend on the personal circumstances of the employee, their income for 2020 and their allowances.
In short you will have to assess your own income and tax liability at the end of the year and pay any additional tax and USC that is due.
I am due to retire in a few years. If I claim the Pandemic Unemployment Payment will I receive the PRSI stamp I need for my contributory pension quota?
The answer to this question is likely yes.
However, we are still awaiting clarification from the government on this issue.
However, typically, if your job was made redundant and you were made unemployed you could claim for Jobseekers Benefit. Part of this benefit is a credited PRSI contribution for each week that you are on benefit.
It is expected that the Covid-19 Pandemic Unemployment Payment will not work any differently when it comes to allocating a PRSI stamp against your record as it is simply an expedited form of the jobseeker's payment.
I am working from home, am I entitled to any tax relief?
Yes, it is likely that you will be entitled to claim E-worker tax relief if you work from home.
This is a relief on expenses that are incurred while working from home.
Here's how it works:
- Employers can choose to pay €3.20 tax-free a day to their employee to cover the additional costs associated with working from home
- However, this payment is not a legal obligation for employers
- If you do not receive this payment you will be entitled to have relief on a number of household items including:
- To claim this relief, simply calculate your total costs and the amount of time you worked from home
- Even if you do receive this payment from your employer, you will still be entitled to tax relief if your costs exceed the payment you receive from your employer
It's important to remember that tax relief can only be claimed on the costs that relate to your time working from home.
Who can help me with my tax entitlements?
You can claim your tax entitlements by applying directly yourself.
Alternatively, if you would like to ensure that you are claiming every tax relief you're entitled to, you should apply with Taxback.com.
It's definitely worth claiming back every cent you're owed. After all, our average Irish tax refund is €1,880.
Would you really want to leave that much money with the taxman?
You can apply with Taxback.com online from the safety of your own home. Our team will ensure you avail of every tax relief you're entitled to including medical and dental expenses, flat rate expenses, home carer's tax credit, E-worker tax relief and much more.
We will handle all of the paperwork and transfer your money straight to your bank account.
It really is that easy!
The average Irish tax refund is €1,880